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Demystifying Real-Time Bidding: Why is everybody talking about it?

Real-Time Bidding, commonly abbreviated to RTB, can appear to be an enigma as well as the so-called ‘rising star’ of the digital marketplace. In digital terms, many marketeers explain the process as ‘buying display advertising on an impression by impression basis in real-time’ but even this explanation is a little opaque to those who are used to dealing with other mediums.

So, give it to me straight…just what is RTB?

Imagine a website is a store and you are a customer entering the store. The moment you enter, your personal attributes are revealed to the staff and they then attempt to cater to your needs. Now on a website, in depth personal attributes (gender, age, interests based on internet history etc) are shared all in the nano-second it takes to load the webpage you have clicked on. During this loading time, the website sends your details out to its registered bidders and potential advertisers. As wiki puts this, imagine a guy shouting to a crowd ‘We’ve got this user who is 30, Indian, male and based in New Jersey, US, and recently searched for return air tickets to Delhi, opening a page on our site. How much are you willing to bid for being the only ad on this page?’. At that point the bids come in for that impression (or customer) and the winning advertiser gets to appear on the webpage when it loads. The advertiser gets to set parameters for how much they want to pay and who they will pay for. This means that the advertiser is only buying the impression you want to reach and not buying in bulk.

But why is this potentially better than display advertising?

It can offer more efficiency and similar to Ebay, the price can be more competitive. However, this does not necessarily mean the inventory on offer lacks quality. This is a key point as just like you can get some amazing deals on Ebay instead of going to the company directly, you can also improve your efficiency by going through RTB and not buying display directly from the vendor or media owner. Nevertheless, the type of formats available may be more limited with less rich media inventory available.

An additional drawback back here is also that some vendors will participate in RTB without giving away who they are to avoid publicizing that their inventory is available more cheaply elsewhere. This means that when a potential advertiser bids, they have to decide based on the information available, for example the price and the format whilst the website remains anonymous.

Interesting! How do you think this will evolve?`

It is anticipated that more vendors will opt into RTB and increase the pool of impressions and inventory available. It is also hoped that more and more vendors will reveal themselves on this platform, therefore increasing transparency and the perceived quality of the formats. For advertisers, the more conventional and accepted this method of automated buying becomes, the more likely the trend will spread beyond first movers as the mainstream market embraces the trading model.

What do you think about RTB? Do you see it as a model which will sit alongside display ad exchanges and vendors, or do you see it evolving to overtake previous models altogether? Let us know what you think below…